Hanson up on takeover talk after German deal

Hanson up on takeover talk after German deal
Published: 14 June 2005

Shares in UK building materials firm Hanson rose 2.5 percent on Monday, a leading gainer in a buoyant European construction and materials sector after a takeover move for Germany’s HeidelbergCement .

HeidelbergCement shares shot up 20 per cent after Spohn Cement GmbH made a surprise US$8bn offer for the company on Friday, stirring up speculation of further sector consolidation across Europe.

Dealers said France’s Lafarge , up as much as 1.3 per cent, could be a bidder for Hanson.

"The HeidelbergCement bid highlights Hanson as a potential bid target so it’s (Hanson) up on that basis. An obvious bidder could be Lafarge but they’re still digesting Blue Circle at the moment," one dealer said.

"People have seen the Heidelberg move and they’re thinking about consolidation because it highlights the potential value in the sector," said an analyst, reporting talk that a private equity company might want to target Hanson.

Merger talk in the cement sector has been fed over the past year by moves such as Swiss cement maker Holcim’s acquisition of Britain’s Aggregate Industries.

Other European construction and building materials stocks have also benefited from consolidation expectations.

"There is a trend of sector consolidation on a global level and that is pushing up related stocks," a Milan-based trader said.

Italian cement firm Buzzi Unicem rose 4.2 per cent at 1330 GMT, while rival Italcementi gained 3.3 per cent after announcing plans to buy an 68 per cent stake in Egypt’s ASEC Cement Co. .

Italcementi-controlled French cement maker Ciments Francais was up 2.3 percent.

"The Heidelberger Cement offer is driving other companies which are seen as takeover candidates. That includes Bilfinger Berger which is a bargain, but also Hochtief . In fact, the whole sector. If you want to get a foothold in Germany, those are the targets," said a mid-cap share trader in Duesseldorf.

Bilfinger Berger and Hochtief stock trade at 1.3 times price to book value, according to Reuters data, below Lafarge at 1.5 times and Holcim and CRH at above two times.

Bilfinger Berger shares have gained more than 30 percent in the past 6 months, Hochtief has risen more than 25 percent, but Heidelberger Cement stock has gained only 19 percent and Holcim almost 18 percent.

Lafarge has added just over nine per cent and CRH just below nine per cent.

"Heidelberger Cement’s (historical) discount to rivals Lafarge and Holcim has turned into a premium. So from the current perspective, we argue in favour of accepting the offer or selling the share on the market," said Erhard Schmitt at asset manager Helaba Trust. He has a "sell" rating on the share.